Alternative Financing Solutions for Smaller US Manufacturers

With US manufacturing staging a comeback despite headwinds, find out how to get the financing your manufacturing business needs to grow and succeed.

Despite headwinds, notably a strong dollar and a weak energy sector, US manufacturing remains the most competitive in the world, according to newly released research by Oxford Economics. Deloitte’s 2016 Global Manufacturing Competitiveness Index similarly emphasizes the strength of the sector, forecasting that the US will become the most competitive manufacturing nation over the next five years, with the current leader China sliding into second position.

Financing Challenges Faced by Smaller Manufacturers

Nonetheless, many small and lower middle market manufacturing companies in the US continue to find it difficult to secure the funding they need to capitalize on upcoming commercial growth opportunities. According to the latest report by the National Small Business Association, more than one in four small businesses are without the capital they need. This is preventing these companies from growing their business or expanding operations (31%), financing increased sales (18%), and increasing inventory to meet demand (10%).

Unlocking the Value of Your Assets

Traditional banks rely primarily on credit worthiness to determine whether, how much, and at what cost to lend to a business. Unfortunately, the application-to-loan ratio is low. With mounting pressure from regulators, banks have been tightening commercial lending standards once again.

However, many smaller businesses don’t appreciate the sheer extent to which they can leverage their business assets to secure the funding they need. Called asset-based lending (or “ABL”), this type of financing is affordable and offers flexible loan structures. Loans come with fewer financial covenants than bank loans, and close more quickly than most other financing methods. ABL lenders focus on collateral rather than credit-worthiness, and therefore can offer a viable and attractive alternative to traditional bank financing.

How US Capital Partners Can Help

Getting the right financing can make all the difference for a smaller manufacturing business. At US Capital Partners, manufacturers can borrow money using their liquid, current assets or their fixed assets as collateral. Loans can be used to secure working capital, but also to finance growth, acquisitions, or capital expenditure.

To give you a few typical examples, US Capital Partners has provided financing of $10 million for an award-winning manufacturer for the aerospace industry, $5 million for a manufacturer of organic soy products, $2 million for a manufacturer of memory storage products, and $6 million for a manufacturer of advanced laser technology.